January 11th, 2007, sees the installation of the first of six automated chassis lines which will build the Zastava 10. All lines will be functional by May. In June, they will produce their first car - and, in October, Britain's oldest auto magazine (Autocar) will praise these lines as the most modern in the region.

January 2007 sees 200 Zastava 10s sold; February, 157.

In March 2007, Zastava Auto Director Zoran Bogdanovic announces that the entire Zastava 10 production line has been installed. He expects that the quality of cars produced in Kragujevac will be "better than even the Italian original." Zastava has, after all, purchased brand new equipment, in contrast to older machinery used on Italian production lines.

New Italian; German, and Belgian technology, purchased from Italian firm Comau, will enable one Zastava 10 to leave the line every five minutes.

Bogdanovic expects monthly production levels to reach 400 by the end of the year.

Surveying Zastava's success in installing and preparing the line, Zastava Vozila Vice Chairman Miodrag Savievi expects that negotiations with Fiat will continue in December, with the aim of producing another two vehicles. Rumors suggest that one of these could be the Fiat Doblo, and that production could begin in April 2009.

"Aimed at large families and small-business owners, the Doblo is competitive with the Dacia Logan MCV," says Savievi.
"The vehicle is currently being made in Italy and Turkey, but has yet to make its mark in Serbia. If Zastava builds the car, it will be assembled here with Fiat badging, although we're considering producing it and its components under a full license, as with the Zastava 10."
The second automobile likely to be made at Zastava is still in Fiat's product development and stages. Said to be roomy and simple, the car would sell for around 5,000 euros. Production is to start in Brazil in 2009, followed by the start of production in Turkey and Israel. Zastava hopes to be the new car's fourth home.

Zastava foresees the ability to build the car without subsidies, in a series of 50,000 per year.

Japanese Sojitz interested in renovating Zastava's cars

In January 2007, the Japanese Sojitz corporation announces its interest in renovating Zastava's cars with Nissan technology, and through additional investment in Zastava's Kragujevac facilities.

Zastava media representative Dragan Radojevi tells Serbian newspaper Blic that Sojitz's president, Takashi Koneko, has sought a meeting with Zastava management over the modernization of the Florida In so that it might, together with the Zastava 10, be sold in the Middle East; Asia, and Africa.

Sojitz has a track record in such matters, having used Nissan technology to advance vehicle production in Iran.

It is estimated that 1.2 billion euros will be required to develop a completely new automobile at Zastava. The ability exists, but the money does not. To secure the existence of the factory, and that of 100,000 jobs across 56 towns in Serbia, Zastava must sell at least 50,000 cars per year.

In March 2007, it is announced that a second Japanese corporation, one which regularly represents the interests of Japanese Nissan; Suzuki; Mitsubishi; Subaru, and Isuzu, as well as those of South Korean Hyundai, has been discussing a potential partnership with Zastava. A delegation from Kragujevac is send to India, where the corporation has an office, to continue the discussion.

It emerges that several Japanese companies have shown an interest in assembling their models on Zastava's new Z10 line. The line is flexible, and adding more models would require minimal investment, Zastava says.

The companies interested are believed to already have ready-made markets in made for the cars that Zastava would produce.

Representatives of Serbia's auto and truck industries call for privatization through strategic partnerships

The directors and union presidents of nine companies across Serbia's auto and truck industries call for their privatization through strategic partnerships, with the relevant subsidies maintained until the requisite technological standards for export to all world markets are met.

Zastava Automobili is among the companies represented, together with Zastava Kamioni (Zastava trucks); Zastava Specijalni Automobili of Sombor (Zastava commercial vehicles); 21. Oktobar of Kragujevac; FAP of Priboj; DMB-FAM of Belgrade; Petar Drapšin of Mladenovac, and Motins of Novi Sad.

Judging that the government has not yet shown serious interest in returning these companies to former, pre-war glory, the representatives call for a halt to the indiscriminate firing of employees, and that a controlled, voluntary system to solve overemployment issues take hold, as part of a national strategy to develop Serbia's industry.

2008 Zastava Florida TDC: the first domestic diesel

At the 2007 Belgrade International Motor Show, it is announced that Zastava's first diesel automobile will begin production in March 2008. The Florida TDC debuts at the show, featuring a Euro 4 diesel engine.

The motor is produced by France's PSA/ Peugeot-Citroen. A turbocharged four-cylinder common-rail diesel, co-developed with Ford, the unit is currently used in the Citroen C1; C2, and C3; the Peugeot 107; 1007; 206, and 207; the Ford Fiesta and Fusion; the Mazda2, and the Toyota Aygo. The Citroen C1 and Peugeot 107 use a low-powered, 54-horsepower version of this engine.

As the car debuts, Zastava's Automobile Institute, the automaker's R&D; department charged with the development of future Zastava cars, is completing testing in collaboration with PSA/ Peugeot Citroen and Bosch.

Andrija Savi, project manager, emphasizes that the Florida In has been completely adapted to the new engine, with modifications to engine mounts; clutch; gearbox; electronic throttle control; fuel delivery system, and a whole host of additional changes. Savi makes special mention of the car's multiplexed electrical network, noting that the use of Peugeot's computer has required a complete redesign of the Florida In's electrical systems to work with it.

Standard equipment includes an immobilizer, a key requirement of cars sold in the European Union.

The price is not announced, although the diesel is - as ever with diesel cars - expected to be somewhat more expensive than the gasoline Florida In L. Nonetheless, Zastava figures that the car's exceptional fuel economy, enabled by its low weight and by the reprogramming of its computer system, will make it a worthwhile investment, particularly for drivers who regularly cover long distances.

Zastava and GM, together?

By April 2007, Zastava and General Motors are believed to have concluded negotiations over a potential partnership. Preliminary information suggests a deal that will foresee the assembly of Opels in Kragujevac, and their eventual production.

Leaks to the media additionally imply that, contrary to the case of the Zastava 10 and Fiat, Zastava will not purchase a license from General Motors; rather, cars emerging from Kragujevac lines will bear the Opel badge.

The deal, Zastava says, is primarily waiting on the approval of the Serbian government to import Opel cars while Kragujevac production lines are prepared for their new charges.

June 4th, 2007: The Zastava 10 emerges from Kragujevac

June sees Kragujevac begin production of the Zastava 10, with a full Fiat license that enables Zastava and its suppliers to produce parts for the new car. On June 4th, 2007, the first locally-produced Zastava 10 leaves the line.

The new line, in which 14.7 million euros have been invested, will produce 96 Zastava 10 cars by the end of the month. Zastava Auto Director Zoran Bogdanovi expects monthly production to increase to 192 in July, and to 400 in August. 240 of Zastava's best assembly-line workers are involved in the process.

Building the car marks a new beginning for the domestic automotive industry. Producing the Fiat Punto II.5 has proved to be a successful strategy, notes Bogdanovi, adding that "the car continues to be popular in Europe, and thus Fiat, which had planned to stop production in 2006, has continued to build the car through 2010.
"We've invested 4 million euros in the chassis line alone. A part of it has been purchased from Fiat and renovated, while the main line is totally new and completely robotized. This is the very latest in auto production technology, of the very same type that Mercedes-Benz uses. A Zastava 10 will leave the line every five minutes."
Bogdanovi reminds the media of the numerous guarantees which ensure that the Zastava 10's quality will be beyond reproach, including regular checks by Fiat personnel; American laser checking of wheel alignment; headlamp alignment; electronic systems, and driving characteristics, and German Zeiss testing equipment.

Indeed, Zastava's use of Zeiss marks the only such installation in southeast Europe. Zeiss' digital technology will measure the dimensions and geometry of every key part of the Zastava 10, with low tolerance for error.

The Zastava 10 represents a great chance for Serbia's industry

As the first Zastava 10 leaves the line, Zastava continues it search for suppliers. 80 Serbian companies have shown an interest in producing parts for the car. Each supplier must pass Fiat's quality standards, and must invest at least 500,000 euros in the equipment required to produce parts for the car. The Serbian Development Fund may provide credit for such purchases.

One domestic supplier said to be particularly close to a contract is Poliester of Priboj.

At the same time, representatives of Croatian companies visit Zastava on May 28th, for a presentation of the project. Many of the Croatian firms are former Zastava suppliers.

Croatia's Plastik of Solina (once Jugoplastika) hopes for a contract to produce the Zastava 10's dashboard; spoilers; bumpers; roof, and side panels. Munja of Zagreb is looking to supply batteries, while Lipik presents a proposal for the production of all glass.

In the first three months of production, the Zastava 10 will be exclusively assembled from Italian parts. In Autumn 2007, local producers will begin supplying parts for the car.

Zastava is also talking to Fiat about extending the markets for the Zastava 10. "We've secured a contract to sell the car in Croatia; Bosnia-Hercegovina; Montenegro; Macedonia; Bulgaria; Romania, and Bulgaria," say representatives.
"We cannot sell more than 6,000 Zastava 10s per year in Serbia, but our line can produce 800 cars per month. If we get licenses to sell the Zastava 10 outside of the immediate region, we can raise production to 20,000 per year."
Zastava 10 in Russia?

Toward the end of June, Zastava announces that Turin will permit the Zastava 10 to be sold in Russia. The agreement ensues despite Fiat's decision to continue producing the Punto II.5 through 2010. It is believed that Serbia's customs-free trade agreement with Russia is a major factor in the deal.

With the Zastava 10, Zastava hopes to cover not only the Balkan market and its population of 50 million, but all of Eastern Europe. In addition to Russia, Zastava is also looking at the Ukraine market, where half a million new cars are sold per year.

"Considerably relived, we await privatization"

On July 3rd, Zastava Group CEO Zoran Radojevi announces that Zastava Automobili awaits privatization with considerable relief.

"It seems clear that we will expand our repertoire," Radojevi says.
"We're in talks with General Motors regarding the production of one of their cars in Kragujevac. Part of our strategy has been to, in 2008, begin building a car along similar lines as outlined in the Fiat deal, a car which would not be a competitor to the Zastava 10. In 2009, we're expecting to be making a completely new car.
"Only through a well-executed privatization process can Zastava ably return to the world scene.
"We'd like the buyer to be a major automaker.
"We believe that there is a great chance that privatization will succeed. By December, we will have prepared the requisite tender documentation."
Opel Astra Classic II - by Zastava

On July 19th, Zastava Automobili of Kragujevac signs an agreement with General Motors of Detroit regarding the production of the Opel Astra Classic II.

The agreement is announced at a press conference held by the Serbian government, attended by Serbian Deputy Prime Minister Boidar Ðeli; Minister of Economy and Regional Development Mlaan Dinki; Minister of Trade Predrag Bubalo; Zastava Group CEO Zoran Radojevi, and Duncan Aldred, GM Sales & Marketing Director for Central and Eastern Europe.

The agreement foresees the assembly of the Opel Astra Classic II at Zastava in Kragujevac, with components sourced from Opel. By 2012, annual production will reach 10,000 cars.

The Kragujevac assembly of the car is to begin in the third quarter of 2008, says Duncan Aldred.

"The decision of General Motors to produce the Astra Classic II in Kragujevac sends a positive signal to our economy, and to foreign investors," says Zoran Radojevi.

GM's team of experts and Zastava's engineers have begun cooperating, preparing for the necessary transfer of equipment required to build the Astra Classic II to GM quality specifications.

Until local assembly begins, the car will be imported, customs-free.

"The government has permitted the customs-free import of 8,300 cars: 3,300 this year, and 5,000 in 2008," says Mlaan Dinki, adding that the Astra Classic II will cost 10,800 euros (tax included), reduced from 13,250.

Zoran Stoši, the director of Zastava AGM, the firm created to handle the agreement, announces that three versions of the Astra Classic II will be available: a four-door; a five-door, and a wagon.

Stoši adds that Zastava has secured the assembly of a car in which Serbian buyers have shown considerable interest. He notes that profits from the customs-free sales of the car, through Zastava AGM, will provide the necessary capital for investment in the production of the Astra Classic II.

Two Euro 4 gasoline engines - a 90-horsepower, 1.4-liter and a 103-horsepower, 1.6-liter - and one Euro 4 diesel unit (an 80-horsepower 1.7-liter motor) are to be offered. All models will have five-speed manual transmissions.

General Motors is the world leader in automotive production, leading in sales for 76 years. The company employs 284,000 people around the world, and counted more than 270 billion dollars in revenue in 2006.

In mid-July, Serbia's Privatization Agency permits Zastava to mortgage several of its assets in order to receive financial credit which will enable the execution of its agreement with General Motors.

July 30th, 2007: The first Opel Astra Classic IIs arrive

From August through September 24th, 700 Opel Astra Classic IIs find homes, while another 600 will be sold in October.

A team of Opel technicians visits Kragujevac, working together with Zastava engineers to prepare the factory's lines for production of the Opel Astra Classic II.

"The Opel team has noted that Zastava has made major technological improvements, and has judged the factory to be more than capable of producing modern automobiles," says Zastava AGM Director Zoran Stoši, reminding the media that the flexible Zastava 10 production line can be used to assemble Opel Astra Classic IIs.

The agreement between Zastava Automobili and General Motors foresees the production of yet another Opel car by Zastava, but there is as yet no word as to which model that will be.

The Zastava 10: sold out

Zastava Group CEO Zoran Radojevi announces that, as of the beginning of August, the entire contingent of 7,200 imported Zastava 10s will be sold out. He tells Kragujevac's Svetlost weekly that the excellent sales results for the car underlines that the Kragujevac factory "made a good choice."

"The Zastava 10 is selling very well. We're currently in first place among B-segment cars in Serbia."

Radojevi notes the positive financial impact of Zastava's contract with Fiat, saying that Zastava Auto earned 96 million dinars in 2006.

"This year, we hope for as much or more in profit... by the end of the year, 3,000 Zastava 10s will have been sold in 2007," says Radojevi.
"Zastava Automobili is taking preparations for privatization very seriously. It expects to attract a major automaker as a permanent strategic partner."
The answer is the production of a completely new model

In producing two new models, the Zastava 10 and Opel Astra Classic II, Zastava Automobili is emerging from the difficulties of its past, says Zastava Group CEO Zoran Radojevi. Yet, he adds, the factory's complete recovery will require the production of a completely new model.

"In this vein, our tender documentation, which we're currently working on, carefully defines this as a goal to be reached in the next two years. We must produce a new model that is attractive on the Balkan and European markets.
"In having installed a new, robotized line, on which the Zastava 10 and Opel Astra Classic II will be produced, Zastava has prepared itself for prosperous cooperation with virtually all major automakers.
"We've already secured a deal with General Motors which will see a second GM model produced here in 2009.
"In attracting a major automaker as a permanent strategic partner, we would become a part of that larger company and, at Zastava, relatively small investment would enable the production of a new model.
"That new, affordable model could be produced in numbers of up to 120,000 per year.
"The Serbian government has helped us endure, and I'm sure that they will continue to support us. With their help, we will ask all major automakers to come and see how quickly our people have adapted to the industry's foremost technology."
Zastava 10 on the Serbian province of Kosovo; in Albania, and in Macedonia

Zastava Auto and J&C; Company from the Serbian province of Kosovo sign an agreement in Kragujevac on August 27th, enabling the sale of 1,200 Zastava 10 models in Kosovo & Metohija; Albania, and western Macedonia.

The agreement is signed with Zastava Auto Director Zoran Bogdanovi, who says that Zastava will earn 6,500 euros from every automobile sold.

"J&C; Company will set its own price for the car," he adds.

Zastava Automobili tender in December

In September, Serbian Minister for Economy and Regional Development Mlaan Dinki confirms that the tender documentation for the privatization of Zastava Automobili will be completed by December. Five global companies have shown interest in purchasing the Kragujevac automaker, he says: General Motors; Fiat; Ford, and a firm from each of India and China.

Per Zastava Group CEO Zoran Radojevi, the tender will require that the buyer must continue to install modern technology for raisng Zastava's annual production capacity to between 120,000 and 150,000 cars per year.

"We figure that investment must minimally reach 151 million euros over a period of two years, but it is more than likely that the number will reach several times that amount," says Radojevi.

"Over this two-year period, another 5,000 people would be employed at Zastava Automobili.
"We continue to believe that we're best-suited for cooperation with a major automaker. As they tell you in school - associate with the best students, and make sure you're the type they want to associate with."
Zastava Automobili will be sold as a whole, including the "Chassis"; "Assembly"; "Paint"; "Institute/ R&D;"; "Zastava Auto" divisions, and various other pieces within the company fold.

In the first nine months of 2007, Zastava sells 9,812 cars

From January through September 2007, Zastava remains the best-selling brand in Serbia, moving 9,812 cars, ahead of second-place Opel (2,769).

The sales of 478 Koral In models in September confirm the car as Serbia's #1 seller. Behind the Koral In is the Opel Astra Classic II (381 sales), followed by the popular Skala 55 (313) and Zastava 10 (260).

Austrian Steyr-Puch interested in Zastava

In October, Austrian Steyr-Puch, which assembles cars for automakers including BMW, visits Kragujevac and discusses its interest in Zastava with the Serbian Ministry of Economy.

Zastava welcomes Steyr-Puch's interest, but adds that it anticipates further discussions with the world's automakers.

From the Zastava/ GM agreement comes the news that Opel may begin moving its Astra Classic II production line from Poland to Kragujevac.

Zastava presents two compressed-natural-gas vehicles

On October 20th, 2007, Zastava Auto and Zastava Specijalni Automobili (Zastava Commercial Vehicles) of Sombor present compressed-natural-gas versions of the Zastava 10 and Zastava Florida Max Trafik Poly Pick-up.

The project manager for both vehicles, Milan Milovanovi of the Zastava Institute (R&D;), confirms that they are ready for production. He adds that compressed-natural-gas vehicles boast major improvements in fuel economy, using a quarter of the fuel of their gasoline counterparts. The system costs 1,600 euros to install.

Zastava 10 Van

In October, the Zastava 10 Van appears on the market. A commercial-vehicle version of the popular Zastava 10, it is priced at 6,990 euros.

Standard equipment is identical to that of the base Zastava 10, including variable-assistance "City Mode" power steering, which improves in-town maneuverability.

Autocar, Britain's oldest car magazine, praises Zastava

On October 31st, 2007, Autocar, Britain's oldest car magazine, praises Zastava as "a leader in New Europe auto manufacturing."

The complete text follows below.

„Zašto „Zastavin“ oporavak nije šala“ - Autocar, 31. oktobar 2007. ... (more)

Tender documentation to be complete in December

In November, Zastava Group CEO Zoran Radojevi confirms that tender documentation for the privatization of Zastava Automobili will be ready in December. Zastava, he adds, has been working around the clock with local consultant firm Citadel to complete the process.

"I expect that several foreign companies will take an interest in the privatization of Zastava," Radojevi says.

"We must also remember that Zastava has 5-year contracts with General Motors and Fiat. These agreements are part and parcel of the tender documentation which will be presented."
Radojevi adds that the tender documentation must also encompass the requirement that a new automobile be produced, through the investment of at least 157 million euros.

The Austrians ask that privatization be delayed

Steyr-Puch, one of the divisions of Magna-Steyr, a company with which Zastava has worked in the past, remains interested in the privatization of Zastava. The Austrians suggest that they would very much like to, with the cooperation of Zastava's engineers, design a new automobile that could be produced at Zastava.

On November 27th, 2007, a delegation comprising Magna-Steyr's management asks Serbia's Privatization Agency to delay the privatization of Zastava, noting that December 15th (the day announced for the beginning of the process) comes too early for Magna-Steyr to properly prepare its bid.

Zastava at the 2007 Kragujevac Auto Show

At its home auto show in Kragujevac on November 15th, Zastava presents its range with a 10% discount across the board (12% on the Zastava 10).

Zastava is prepared for privatization

As Serbian Minister of Economy and Regional Development Mlaan Dinki announces that the privatization of Zastava will begin in December, Zastava Group CEO Zoran Radojevi confirms that the requisite tender documentation has been turned over to the Serbian Privatization Agency.

"Everything now depends on the agency, and on the potential buyer," says Radojevi.

"After several years of agony, Zastava is healthy, and has become much more attractive to its future owner."
The company has paid its dues, and has no further debt. A new robotized line has been installed at a cost of 15 million euros. Two important contracts with Fiat and General Motors have been signed. The number of employees at Zastava Automobili has been dramatically reduced, in search of optimum efficiency.

Mlaan Dinki announces that potential buyers will be given three months to research the company, with offers to be made by the end of May 2008.

Dinki emphasizes that he has spoken with many interested automakers, and that he expects the privatization of Zastava Automobili to be successful. He adds that the Serbian government will assist the losing bidder in creating a new auto factory in Serbia, and that the government would support Serbia's ability to export cars and car parts customs-free to Russia, in the hope of solving Serbia's automobile industry issues.

Zastava in 2008 plans to export 6.5 million euros worth of 5-speed manual transmissions to Russia's AvtoVAZ, which produces Lada-brand cars. Another contract, for the export of 3.5 million euros of car parts through the end of 2009, will be signed shortly.

Zastava formally announces the start of the privatization process

By the end of December 2007, Serbia's Privatization Agency has begun the process of privatizing Zastava Automobili. The government's 87.2% share of Zastava Automobili will be sold, in addition to the Serbian Development Fund's 11.8% share.

The formal documentation requests interested parties to visit the agency for the purpose of researching the company, from January 14th, through March 31st, 2008. Access to tender documentation will be granted to automakers who have produced cars for the past three years, and who counted revenue of at least half a billion euros in 2006.

Interested parties are to make their interest known by March 20th, 2008.

Serbian Minister of Economy and Regional Development Mlaan Dinki notes that he expects at least two major automakers to express interest in Zastava, and repeats that the government will assist the losing bidder in opening a second auto factory in Serbia.

"Serbia has the expertise and the tradition to build quality cars," says Dinki.
"It's time to push our industry forward."
"We'll see what General Motors does," he adds.

Privatization of Zastava Specijalni Automobili

Serbia's Privatization Agency will, on February 22nd, present a 99.2% share of Zastava Specijalni Automobili (Zastava Commercial Vehicles) of Sombor, at a starting price of 631.8 million dinars. 89.2% of the company is owned by the government, with the remaining 9.7% coming from the Serbian Development Fund.

The investor will be required to invest 40 million dinars in the company within the first year of taking ownership.

Zastava will produce 18,600 cars in 2008

Zastava Automobili will produce 18,600 automobiles in 2008. The company's production plan calls for the manufacture of 11,000 Florida In; Koral In, and Skala 55 models. 6,000 Zastava 10 models will be produced, in addition to 1,500 Opels.

Per an agreement between Zastava Automobili and General Motors, Opel production will begin in the final quarter of 2008. While it was initially suggested that the Opel Astra Classic II will be produced in Kragujevac, Zastava has yet to confirm this as of the close of 2007.
(C) 2007-2008, Miroslav Pai & Dragan Romevi. All rights reserved/ sva prava zadržana.
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